Property Taxes

[Dom Lombardo]

Hello BP, I am a novice investor and was intrigued by the idea of becoming a landlord. I see that you could make good money in this particular field but I had one obstacle that I simply don't understand. For example lets say you buy a single family house and the mortgage is $600/month and you rent it out for $1000/ month. So now you'll say wow $400/month positive cash flow!!! But the only thing now is that you have to pay for property taxes. Lets say in the area for your house, the property taxes are $5,000 a year. That now leaves you with a -200/month cash flow. I simply just don't understand how one can make money on a property when property taxes are more than your rental income profit. If anyone could please help, I would like some advice or guidance on how abouts to fix this problem. Thanks

[Ned Carey]

@Dom Lombardo you are right many properties simply do not make sense as rentals. The rent will not cover various expenses and the mortgage payment.

The key is to by better deals, or perhaps properties in a different area. You will find there are a LOT more expenses than just taxes. There are many things new investors do not think about; Maintenance, licenses, accounting costs, vacancy, management fees, re-rent repairs, Capital reserves for longer term expenses like roofs, water heaters, and appliances.

So again I say, do better deals. Plan all these costs up front and find properties that still make money. Keep reading here on BP and you will start to learn how to  find these deals

Good luck - Ned